NEWS RELEASE

FOR IMMEDIATE RELEASE

JUNE 17, 2004

CONTACT: Sarah Hemingway

212.655.6059 (US)

ENTERPRISE RISK MANAGEMENT IS ESSENTIAL TO STRATEGIC MANAGEMENT

JUNE 17, 2004 – NEW YORK – The International Federation of Risk and Insurance Management Associations (IFRIMA) released a position paper today explaining how and why enterprise risk management should be implemented across every organizational structure in order to meet business objectives.

The document further explains that a risk professional needs to be positioned high enough in that structure to ensure the success of the program, suggesting a high status for risk managers in different industries.

“Risk is inevitable in today’s business environment,” said IFRIMA president, Susan Meltzer. “It is time to get risk professionals in charge of mitigating the risks they are trained to identify and thereby leverage opportunities that benefit the whole of the company.”

According to the document, posted on www.ifrima.org, the value of risk management can and should be achieved by developing policies and activities in three significant areas:

1. Contribution to the overall business objectives of the organization.

All organizations must take risk in order to be successful. Risk management, appropriately applied, will allow the organization to take those risks, which are necessary to its overall value, and to leverage opportunities from the ability to take and manage risks.

2. Establishment of a consistent, transparent framework for corporate governance.

Good corporate governance requires that effective risk management programs be established by Boards of Directors and implemented by management. These programs must be comprehensive and transparent, promoting risk consciousness through the organization and allowing for comprehensive reporting externally to shareholders and regulators.

3. Protection for the company from adverse variances and catastrophes

Protection from adverse variances and catastrophes requires the consideration of both internal and external risk factors. In addition, to achieve appropriate protection requires a combined focus on risk mitigation and risk transfer through insurance, hedging or other financial instruments. The practice of hazard and insurable risk management has matured significantly over the years and has protected organizations from catastrophic risk exposures to their properties, personnel and for their liabilities.

IFRIMA does not intend to offer a risk management standard, but instead a best practices/guideline document.

“Risk professionals don’t fit into a certain mold,” Meltzer said, who also serves as Assistant Vice President of Risk Management at Sun Life Financial in Ontario. “Frankly, that is the intrigue of this profession for many of us. Across different industries, throughout different countries the job description varies tremendously.”

The best practices/guidelines suggest implementation of a plan congruent with the culture and mission of the organization. This includes:

1. Risk identification and assessment. This step includes identification of the significant risks that face the organization including development of risk registers and risk mapping along with both quantitative and qualitative analysis of the exposures facing the organization.

2. Risk mitigation strategies. The development of risk mitigation strategies is key to the management of risk issues and action plans need to be included in the overall business plans of the organization to ensure successful implementation.

3. Residual risk transfer. Once all risk mitigation strategies have been evaluated and implemented as appropriate, the residual risk has to be effectively managed through a combination of insurance, hedging and other alternative techniques ensuring the best possible coverage at the lowest possible transfer cost.

4. Risk reporting. The organization requires the ability to report on risks internally, specifically to senior management and the Board of Directors.

5. Monitoring. This part of the process is designed to ensure adherence to and effectiveness and relevance of policies and procedures relating to risk management.

The paper was approved at the IFRIMA Board of Director’s meeting in April 2004. The issuing of this paper comes at the end of a two year strategic planning period for IFRIMA, which is positioning itself as an active partner in the global risk management arena. IFRIMA supported a global risk management conference in Johannesburg, South Africa in October 2002 and formalized a process by which IFRIMA member organizations may apply to have their annual conferences be designated as IFRIMA worldwide conferences, at which IFRIMA will invite their delegation to attend. The next IFRIMA designated conference will take place September 7-10, 2004 in Bermuda in cooperation with ALARYS, the Latin American risk management association. Subsequent IFRIMA designated conferences will be the Federation of European Risk Managers Association (FERMA) conference in Lisbon in 2005 and the Risk and Insurance Management Society, Inc. (RIMS) 2006 Conference in Hawaii.

"These activities, and now this issuing of the ERM position paper, reinforces the role of IFRIMA as the leading organization, on a worldwide scale, in risk management and its application," said Maurizio Castelli, Chairman of IFRIMA and Group Risk Manager for Pirelli SpA in Milan.

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The International Federation of Risk and Insurance Management Associations (IFRIMA) is the international umbrella organization for risk management associations representing 26 organizations and over 30 countries throughout the world. With its roots going back to the 1930s and its development through the discipline of insurance and risk management, IFRIMA is uniquely positioned as a leader in risk management and its application.